How Apple Got Off Cheap After Its Indie Dustup: Analysis

Taylor Swift
Dimitrios Kambouris/LP5/Getty Images for TAS

Taylor Swift performs onstage during The 1989 World Tour on June 13, 2015 at Lincoln Financial Field in Philadelphia, Pennsylvania.

Since Taylor Swift called Apple out over its plan to forego royalty payments during its three month trial, and Eddie Cue's quick response to Swift agreeing that payments are in order, there has been a flood of stories in the mainstream press about how the artist "schooled" Apple. The latest to do so was a story in the New York Post on June 28, which ran under the headline, "Taylor Swift's Business Plan Outwits Apple Executives."

Maybe the mainstream press is correct and I am reading this situation all wrong, but from where I sit, Apple executives likely want to give Swift a great big kiss for what she did.

First of all, she got them out of a potentially embarrassing situation. The majority of the independent label community had not signed on to give the service access to catalogs. With Indie Week and the New Music Seminar beginning June 22, it was about to become widely known that the indie sector was in open revolt against the required three-months period of supplying their music to Apple for free.

While the three major labels had all signed on, none of the large indie labels or indie distributors had opted in, according to numerous sources. However, since the major labels had signed their deals, major label-owned "indie" distributors had shoved the three-month free period down the throats of labels they distribute digitally, which caused a great deal of turmoil among them. Sources say that late in the game, the majors began conceding that the indie labels they digitally distribute could opt out of the Apple deal, if they so choose. Sources tell Billboard that some big indie labels were about to do just that.

Making matters worse, a draft of Apple's publishing contract was just hitting the indie publishing community on June 19, resulting in the phones wires going crazy over that weekend as the business affairs people at those companies realized the implications of Apple's contract.

Instead of having two full-scale revolts on their hands from indie labels and publishers, Apple got to sidestep all the bad press the indie sector can generate. If you don't know how much that is, just ask YouTube.

On Tuesday, June 23, at A2IM's 10th anniversary party, indie executives were drunkenly declaring Martin Mills their hero -- his company, the Beggars Group, posted a statement on June 17 that questioned why the label, their artists, and other rights owners should bear the cost of Apple Music's custumer acquisition. Most of the indie excs in attendance overlooked Swift's contribution to the proceedings, except to note that Swift's label, Big Machine, is part of A2IM, and that her message was consistent with how most of the trade group's members felt.

"The optics don't look good if Apple backs down to indie labels," as one indie executive told Retail Track. "But if they back down to an artist like Taylor Swift, it shows they are sensitive to artist concerns, unlike Spotify, who blew Taylor swift off when she complained about the free tier."

Which brings us to the second point which, admittedly, has been highlighted by Billboard and elsewhere previously. Apple got to stick it to Spotify, without being seen as deliberately doing so. In one (forgive me) 'swift' move, Apple got to position itself as the artist-friendly service, sharpening the memory that Spotify not only ignored Swift's complaint about its freemium stance, but refused to keep her music up on their paid service, as if they were punishing her for her stance on the free tier.

Another thing about Cupertino's turnaround that worked to Apple's benefit: They are getting off cheap. Usually, services pay the labels a minimum of $0.0025 per stream, but labels were so grateful that they were going to get paid, they didn't start griping about the Apple rate -- $0.002 per stream until after they signed the contract.

Finally, and perhaps most importantly, the Swift concession gave Apple so much free publicity it would be hard to quantify how many tens of millions of dollars they would have had to spend to get the word out that they were launching a streaming service. Now, everyone in the Western world knows Apple has launched a streaming service.

In a way, the Swift turnaround gave Apple executives four splendid opportunities, which they shrewdly cashed in on by conceding that Swift was right and payments would be made. Talk about making lemonade from lemons.

Apple and Big Machine, Taylor Swift's record label, did not respond to a request for comment.


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